Communication nation

This summer InAVate took a trip to South Africa in an effort to further explore the market and its opportunities. Anna Mitchell learns that as bandwidth availability increases, videoconferencing technologies are finding a comfortable fit in a country that has pockets of trade and industry dispersed in a vast geographic expanse.

Recently news from South Africa has been news about the FIFA World Cup. InAVate reported on the opportunities the event would bring, challenges the country would need to overcome to stage it and technologies installed in the major stadiums.

But, the World Cup was over a year ago and, whilst its legacy is still clear, there’s a lot more to the country than the temporary boost the event provided.

“Currently the big boom in the corporate market is videoconferencing,” explains Derek Marsden, training co-ordinator at Electrosonic SA. “If we go back five years, nobody here was using IP. The one organisation that was using IP was Coca-Cola but bandwidth was a serious issue. The company has offices in Kenya and there was no ISDN link between the countries. They did IP conferences once a month and everyone had to log off their workstations.

“But the market is definitely opening up. More and more big multinationals are going to IP now. ISDN is fortunately starting to phase out and bandwidth is constantly opening up. A new undersea cable landed recently. We’re still waiting to benefit from it but I’d say in the last decade we’ve seen exponential growth in the amount of bandwidth available in South Africa.”

Marsden continues: “I know that a lot of big banking institutions and mining organisations rely on videoconferencing. The cost of travel is going up and in South Africa, where we’re a lot more dispersed, videoconferencing definitely has a place.

“The technology is still quite a costly investment but prices are coming down. Solutions are a lot more streamlined and you can get more value for money, especially when it comes to collaboration with the available bandwidth.”

Many AV integrators are starting to feel the benefits of the communications transformation in the country. Selwyn Progrund, project manager of React Marketing, provides integration services for many corporations and notes a surge in videoconferencing installations. Progrund, like Marsden, puts the increase down to the growing availability of bandwidth across the country.

Communication technologies also open the doors to IT integrators and Marsden says that Electrosonic supplies some of major players in the industry. “Some of these IT integrators are setting up an AV component,” he says. “These companies will provide a network infrastructure and then they can kit out presentation environments. So we’re supplying more IT integrators, particularly the big ones, such as Dimension Data, that can afford to add AV to their bouquet of services.”

Digital signage is also an area where Marsden can see potential in South Africa but he acknowledges the market is slow. “A lot of potential customers didn’t really see the bigger picture but we’re getting there.”

He sees South Africa as price sensitive market and also says, in many areas, there is a lack of knowledge. “We’re still playing catch up to Europe and America in terms of our knowledge of what’s out there and how we can benefit. We are a community that embraces new technology but we are slow on the uptake.”

The World Cup can’t be ignored in its contribution to South Africa’s recent infrastructure developments. Particularly in Johannesburg you can see the money that’s been poured in to transport; both road and rail. But, the region is still developing the rail network and maintaining and growing the road system so there’s obviously a need and the funding in place. But, the tournament legacy isn’t totally positive. Progrund says many hotels are running at about 14% capacity and some are closing down. Many integrators report that the World Cup maybe just masked the effects of a recession that’s only starting to bite now.

“We’re very fortunate in this area though,” says Marsden. “Our interest rates are quite high which encourages foreign investment, especially from Europe where they are looking to get a good return and fill the coffers that are now empty. There doesn’t seem to be a shortage of cash, if you look at Johannesburg there’s a lot of construction and development.”

High interest rates are great at promoting investment but what kind of effect do they have on young businesses and cash flow? “It’s something we’re all used to and something we deal with,” says Marsden. “We’ve all learnt to trade on that level.

“Obviously as an importer exchange rate is crucial,” he continues. “Recently the exchange rate has been kind to us but the main thing we need is consistency. If interest rates are high then so be it. But we need consistency. We’ve had problems where things are dipping quite regularly in the space of a month. Sometimes we’ll see a 10% increase in exchange rate.”

In a country that has virtually no manufacturing base for electronics import duties are a key consideration. “Recently we’ve seen around a 30% duty slapped on flat panel professional monitor displays,” explains Marsden. “We’re busy fighting that and SACIA (the South African Communications Industries Association) is taking this up with a handful of industry heavyweights. We’re trying to get some justification for it at the moment because that has hurt us quite a lot”.

Development and investment is also ramping up in the country’s strained power infrastructure. “The truth of the problem has largely been hidden from the consumer,” Marsden notes. “They have been significantly hiking rates for power in this country with the aim to build more power stations but I think there is a lack of transparency in the process.

“However, we have seen some improvements. There are less blackouts but the quality of the power is still a major problem. You can’t guarantee a consistent 220v and we see incidents of people loosing electronic devices because of power surges and brownouts.

“We try and encourage our integrators to use power conditioning products but it’s often something they leave off their quotes – many are learning the hard way. I speak to other importers and it’s a common thread. We get asked when we’re going to supply products with more robust power supplies but that isn’t really where the issue is. It’s definitely a problem but more and more people are starting to see the light and use UPS and power conditioning but it still needs to be taken more seriously.”

The country is also in good position to take advantage of opportunities across the continent. “We have integrators in Namibia and Botswana which are both fairly strong and stable economies. There are other countries in our region, such as Zimbabwe, Mozambique and Zambia, where either the political situation or the economic situation is less stable. A lot of organisations in those areas that require AV integration typically use integrators from South Africa. So I think we’re all getting a fair slice of the sub-Saharan pie without having to take too many risks.”

Money is pouring into many countries in the continent as foreign investors eye up rich mineral resources that are being mined in the region. Investment from China has exploded recently and with that will come more and more opportunities for AV. The mining industry also brings us full circle back to the VC technologies that are currently booming in South Africa. Communications are vital from these remote sites and organisations can save a lot of money if they can get expertise on site without transporting staff or consultants across vast areas.

South Africa has many worries to contend with. Crime is an issue and it often encourages highly trained staff overseas, political stability is still not a given and unemployment and poverty are rife. But, the professionals that work within the AV industry; consultants, integrators, distributors and manufacturers alike, show a cautious optimism and confidence in their region.

Foreign investment is key, it’s a market that is eagerly embracing communications technologies and, although with some caution, it is seeing the benefits AV technology can bring to government institutions, the education market and visitor attractions.

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